Picking out the right coverage can seem daunting, but buying car insurance doesn’t have to be scary. Here’s a step-by-step guide to the process.
If you have a car, you probably also have car insurance. Most U.S. states require drivers to carry a minimum amount of insurance, and even in the two states where car insurance isn’t required by law, drivers still have to be able to pay for any damage they cause, so having car insurance is still essential.
But buying car insurance can feel overwhelming, whether you’re doing it for the first time or the tenth time. If you’re not sure where to start, here are the steps to buying and choosing car insurance coverage:
Don’t worry, that may seem like a lot of steps, but buying car insurance is actually a pretty straightforward process, and you can probably complete the whole process in an afternoon. Let’s break down what’s involved in all of the steps to getting coverage.
There are two ways to buy car insurance, directly from an insurance company or through an independent insurance broker like Policygenius.
If you already have homeowners or renters insurance, it may make sense to purchase your new car insurance policy through the same company. You’ll usually get a discount for bundling multiple types of coverage.
If you already have an auto policy and want to add a new car to your existing coverage, that’s usually simple as well. The only downside to going with your current insurer is that you miss out on shopping around, and you might not get the best possible rates.
You can shop around by getting quotes from several insurance brokers, but this involves a lot of legwork (not to mention a lot of emails — each company will email you a quote). You can do the comparisons on your own this way, but it can take awhile to go through the quote process with every carrier separately.
Buying car insurance through an independent insurance broker like Policygenius can streamline the process. You can fill out one application and get multiple quotes, and then you’ll have an expert guiding you through the process.
Since brokers work with several insurance companies, they can ensure you get the best coverage and the best deal. If you do already have a homeowners or renters policy — or you’re planning to combine policies — a broker can offer you the same bundled savings asa carrier would.
Figuring out how much of each type of car insurance coverage you need is one of the harder parts of buying auto insurance. First, you’ll want to familiarize yourself with the different components of an auto policy. Those coverages include:
Liability coverage - Covers the costs if you cause an accident, damage property or injure someone with your vehicle. Liability insurance is required in most states.
Personal injury protection - Covers medical and rehabilitation expenses if you or your passengers are injured in a car accident. Also covers other related expenses, like lost wages.
Uninsured/underinsured motorist coverage - Covers the costs if you’re in an accident caused by a driver who either doesn’t have insurance or whose insurance can’t pay for the full extent of the damage.
Collision coverage - Covers damage to your own vehicle after an accident, regardless of who was at fault.
Comprehensive coverage - Covers any damage to your car that can happen when it isn’t being driven, including damage from extreme weather, falling objects, flood, fire, vandalism and theft.
Gap insurance - If your car is totaled, this pays out the difference between the car’s actual cash value (ACV), which includes depreciation, and the amount you still owe on a car loan or lease so you aren’t stuck making payments on a car you no longer have.
Then there are additional coverage options, like roadside assistance, which covers things like flat tire changes, jump-starts and towing, or new car replacement coverage, which will pay for a replacement if your new car is totaled, usually within one or two years of ownership.
You’ll also want to look up the car insurance requirements in your state. But remember, your state minimums are a starting point for determining coverage — often, they’re too low to sufficiently cover you in the event of a major accident.
Let’s say your state requires $15,000 in property damage liability coverage, and you cause an accident that results in $45,000 worth of damage. You’ll have to pay the difference, leaving you on the hook for $30,000 which you’ll then have to pay out of pocket.
When choosing coverage types and amounts, consider factors like how often you drive and where, whether your car might be stolen or broken into and if you live somewhere where extreme weather could damage your vehicle.
Whether you decide to apply through an independent broker like Policygenius or conduct a full quote comparison on your own, you’ll need the following info on hand when applying for car insurance:
As you go through the process, you’ll have to answer questions that can help earn you discounts on your coverage, like whether you have any accidents or violations on your record, whether you’re a full time student and if your car is equipped with certain features like an anti-theft device.
No matter how you apply for insurance, you’ll probably get quotes pretty quickly. Some carriers will offer you multiple versions of a quote, usually a basic one with low coverage limits, a standard option with average coverage limits and a third option with very high coverage limits.
Remember that it’s generally a good idea to have high coverage limits for the necessary coverage types, but the higher your limits are the more you’ll pay. Your quote may also include some types of coverage you don’t actually want or need, so look carefully at your options.
And for your deductible, setting it higher leads to lower premiums, because you’re agreeing to pay more out of pocket in the event that you file a claim on your comprehensive or collision insurance.
You may be tempted to choose the car insurance company that offers you the best price, but be sure to do your research on the different carriers. Carrier A may have quoted you slightly higher rates than Carrier B, but if it has significantly higher claims satisfaction ratings, that extra cost could be worth it.
Reviewing an insurance company’s track record and business reputation is just as important as examining the quotes they’ve offered you. The most cost-effective auto insurance policy means nothing if there’s not adequate customer service to go along with it.
So how do you know you’re choosing the right company? There are a few ways to do your due diligence:
Check out ratings on third-party sites like Trustpilot, Consumer Reports, or the Better Business Bureau.
Look up the insurers through the National Association of Insurance Commissioners (NAIC) to see if any complaints have been filed against them, if there are any legal or regulatory problems related to their licensing, or if any financial issues come up.
Once you’ve compared your quotes, read up on your potential insurers, and picked a car insurance company that you feel good about it, it’s time to put that policy in force and get insured.
Whether you are getting quotes directly from an insurer or through an independent insurance broker, you can sign up for the policy through either option and know that you’ll be getting the same rate. Also a bonus: both brokers and carriers can offer you discounted rates on other insurance policies through the same carrier, like renters or homeowners insurance. If you’ve been working through an insurance broker, they may even be able to sign you up for the policy themselves.
If you’ve been shopping for car insurance to replace a current policy, wait until after your new coverage has started before you cancel your old policy. You want to make sure you don’t leave any gaps in coverage.
To do this, set the cancellation date of your old policy and the effective date of your new policy on the same day. Insurance policies begin and end at 12:01 AM on a given date, so you don’t have to worry about having a full day of overlapping insurance.
About the authors
Logan Sachon is the co-founder of The Billfold, a groundbreaking personal finance site for millennials that was named one of Time's 25 Best Blogs of 2012. Her work has been published in New York Magazine, Glamour, The Guardian, BuzzFeed and more.
Anna Swartz is a Managing Editor at Policygenius in New York City, and an expert in auto insurance. Previously, she was a senior staff writer at Mic, writing about news and culture. Her work has appeared in The Dodo, AOL, HuffPost, Salon and Heeb.
Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.
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